Medicines Partnership of Australia

Main menu

Post navigation

PBS costing less for taxpayers

Government spending on the Pharmaceutical Benefits Scheme per head of population has been in decline for almost three years, reinforcing the sustainability of the current scheme.

The Medicines Partnership of Australia has tracked the decline that started with the inception of Expanded and Accelerated Price Disclosure in April 2012. Out-of pocket costs have also declined as a result of price disclosure and more drugs being priced below the general co-payment level.

The analysis also shows that not only is Price Disclosure delivering lower prices, but prescription volumes are also well under control.The first set of Pharmaceutical Benefits Scheme price reductions under the new, further accelerated, Simplified Price Disclosure arrangements which cut in from 1 October 2014 have contributed more than $400 million in annual savings to taxpayers. These savings also represent an equivalent reduction in revenue for pharmaceutical manufacturers, wholesalers and pharmacies

Price reductions applied to 442 forms and strengths of 82 drugs and ranged between 10 per cent and 62 per cent. The four sets of price disclosure reductions over the last 12 months (1 December 2013, 1 April 2014, 1 August 2014 and 1 October 2014) have reduced annual funding on affected drugs by approximately $1 billion. This is on top of the significant savings provided in earlier rounds.

In the period since the last MPA PBS Scorecard, the Parliamentary Budget Office’s Projections of Government spending over the medium term confirmed that the PBS not only had grown slower than GDP historically but predicted that it would represent a “negligible” share of government expenditure growth over the medium term.

It is now time that the consequences of sustained reductions in PBS prices, and the low growth outlook, are properly addressed. All components of the PBS – pharmacies, wholesalers and manufacturers – are under increasing pressure. Now is the time to provide certainty for the industry and for the patients that are so well served by the PBS.

A commitment to further timely investment in cost effective new medicines, viable
remuneration arrangements for pharmacist dispensing and professional services,
and appropriate funding for wholesaling of PBS medicines, is urgently required. To
provide an environment that encourages investment, the sector requires stability
and predictability. Further changes to price disclosure would deter investment and
more jobs would be lost.